“Section 46(3)”
The decision most relied on for Section 46(3) is CIT v. Shoorji Vallabhdas & Co. (46 ITR 144), cited in 551 judgments on BharatTax.
Leading authorities on Section 46(3)
Income tax is levied only on real income that actually materializes, not on hypothetical or notional income, even if accounting entries suggest otherwise. If no income results, there is no tax liability.
Circulars and instructions issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act have the force of law and are binding on all income tax authorities. These circulars can mitigate the rigour of statutory provisions, provide administrative relief, and ensure uniform application of the Act for the benefit of the assessee.
When advances extended in the normal course of business operations become irrecoverable and are written off, these amounts are allowable as a business loss or revenue expenditure.
A statutory corporation undertaking activities that generate income qualifies as a charitable entity under Section 2(15) if its dominant object is general public utility and it is legally obligated to apply its income solely for that purpose, even if the activities appear to be in the nature of trade or business. Such an entity is entitled to registration under Section 12A and exemptions under Section 11.
A state road transport corporation, though state-owned, is a separate legal entity from the State. Its income is distinct from the income of the State and is not exempt from income tax under Article 289 of the Constitution of India.
Section 139(4) of the Income-tax Act, which allows for filing a belated return, acts as a proviso to Section 139(1). Consequently, the time limit for depositing amounts or utilizing funds to claim exemptions, such as under Section 54, extends up to the due date for filing a return under Section 139(4).
A return of income filed within the period allowed under Section 139(4) is valid for claiming exemptions and deductions, including those under Sections 54, 54F, and 80AC. However, depositing the unutilized capital gains in the Capital Gains Account Scheme is a statutory and mandatory requirement for claiming exemption under Section 54F.
When considering the genuineness of a loan transaction, the initial onus lies with the assessee to provide a satisfactory explanation and sufficient material; if discharged, the onus shifts to the Assessing Officer.
